Commercial mortgage
A long-term loan secured on business property, to buy premises you will use yourself or rent to another business.
- Secured on assets
How it works
Like a home mortgage, you pay a deposit and then make monthly repayments at a fixed or variable interest rate. Commercial mortgages usually run for between 1 and 30 years.
- Owner-occupied: for buying premises your business will use.
- Commercial buy-to-let: for buying property to rent to another business.
Lenders look at your trading history. You will usually need accounts for at least the past three years, plus projected trading figures. Interest rates tend to be higher than for home mortgages.
Buying property also brings other costs, such as stamp duty (or its Welsh and Scottish equivalents), business rates, insurance and repairs.
Upsides and downsides
Upsides
- Long repayment terms keep monthly payments lower
- You control the property and can change it without a landlord's permission
- Costs are more predictable than rent
- Any rise in property value benefits you
Downsides
- Ties up capital in a deposit and buying costs
- You are responsible for repairs, compliance and running costs
- Interest rates tend to be higher than for home mortgages
Risks
- The lender can repossess the property if you cannot repay
- Property values can fall
- The building may stop fitting the business if it grows or shrinks
What it costs
- How it is priced
- Interest (fixed or variable) plus arrangement, valuation and legal fees
- Costs that are easy to miss
- Deposit
- Valuation and legal fees
- Stamp duty land tax, land transaction tax (Wales) or land and buildings transaction tax (Scotland)
- Business rates, insurance, repairs and compliance costs once you own the property
Depends on the property's value, your deposit and your ability to repay.
Have a quote? True cost of a loan: work out the APR-equivalent and total cost
Does it fit?
Could fit when
- You have traded for several years and expect to stay in one place
- You can afford the deposit and buying costs
Unlikely to fit when
- You might need to move or change size soon
- You need the deposit money to run the business
- You have traded for less than three years (lenders usually want three years of accounts)
Who can use it
- Business types: Sole trader, Partnership, Private limited company, LLP, Public limited company, Community interest company, Co-operative or community benefit society, Charity
- Needs sales (revenue)
- Usually at least three years of accounts and projected trading figures
- A deposit
Am I ready?
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- Three years of accounts
- Trading projections
- Deposit available
Regulation and protections
Depends on the lender and the property. Many smaller businesses can take an unresolved complaint about an FCA-authorised lender to the Financial Ombudsman Service.
Types of provider: High-street and challenger banks; Specialist commercial property lenders.
Also consider
Sources
- British Business Bank: How to finance a commercial property purchase · checked 7 October 2026
- Financial Ombudsman Service (small business): Who we can help · checked 7 October 2026